Norwood Immunology aims to beat European IPO blues

Norwood Abbey (ASX:NAL NASDAQ:NABYF) is close to snatching victory from the jaws of a hostile London investment market, announcing today that its subsidiary Norwood Immunology will list next Wednesday on London’s Alternative Investment Market (AIM), selling 15 million shares and raising AUD$15 million.

The market capitalisation of Norwood Immunology upon admission to AIM is expected to be approximately AUD$122 million, significantly below the pre-money target valuation of £100 million (AUD$263 million) given by advisers KBC Peel Hunt.

The listing will be closely watched by the European biotechnology community. The market has been jittery since two recent IPOs, Swiss company Basilea and Britain’s Ark Therapeutics, fell below their issue prices. Another debutante-in-waiting, French biotech Immuno-Designed Molecules, recently postponed its Paris IPO at the last minute, citing difficult market conditions.

Norwood had originally planned to raise around AUD$40 million (£15 million), but was forced to lower its expectations. “When this didn’t work, we weren’t prepared to dilute the NAL holding. We raised enough money to get through to our clinical trial endpoints and with our partner TAP pharmaceuticals,” said Norwood Abbey chief operating officer Jeff Bell. “The important thing for us is that we’ll get this into the clinic and start treating patients, and it will represent a commercial return for the company.”

Norwood Immunology was established to commercialise the discovery by Monash scientist Prof Richard Boyd that gonadotrophin releasing hormone (GnRH) can “reboot” the immune system by regenerating the thymus gland.

The therapeutic potential of reinvigorated the thymus is already being trialed at Melbourne's Alfred Hospital and the Peter MacCallum Cancer Institute in patients undergoing bone marrow transplants.

Preliminary trial results showing evidence of thymic regrowth, and increased thymic output of naïve, regulatory T cells and CD4 helper T cells, were presented at the American Society of Hematology conference last December. The final analysis and reporting of these studies is due in mid-2005.

Last year, Norwood also signed a major agreement with TAP Pharmaceutical Products -- the US Market leader in GnRH drugs with Lupron Depot -- to commercialise the use of the drugs for this purpose.

“We’ve been waiting optimistically for our exposure on the capital markets internationally,” said Suzanne Lipe, Norwood Immunology’s chief operating officer. “This is a great opportunity to bring some valuable therapy into the marketplace. So far there is no treatment to boost the immune system. Traditional treatments give some relief but not enough; we’re hoping this will give a significant clinical benefit.”

She explained that because GnRH analogues – marketed as Lupron – have been used for prostate and breast cancer since 1985, safety and tolerability studies will not be necessary. The protocol for a late Phase II double-blind placebo-controlled study is currently being finalised for leukaemia and lymphoma patients who need bone marrow transplants.

The trials will take place in both the US and Europe at centres including the Dana Farber Cancer Institute in Boston, Memorial Sloan Kettering in New York, MD Anderson in Houston and the Royal Free Hospital in London.

“We will be working with TAP pharmaceuticals who will be sponsoring and filing the IND,” said Lipe. She anticipates that results of the trials will be available in early 2006, and that recruiting for a Phase III trial will also begin shortly.

“Based on these results, clinicians will be seeking to publish the data and even though we’ll be applying for a label change we anticipate off-label sales well in advance of that anyway. “We’ll also start to look at a number of other general cancer indications, HIV-AIDS, and autoimmune disease.”

Norwood Abbey currently holds 92 per cent of NI and expects to retain 83 per cent following the listing. Of the remaining shares, 3 per cent are held by Monash University and the 5 per cent by private investors.

The listing is subject to approval at a board meeting, which will take place tonight.